COVID-19 pandemic will go down as one of the greatest world reordering and disruptive events of the 21 Century. No one saw it coming and before we knew it, curfews and all manner of restrictions were enforced to contain the spread of the virus. The past few months have not been a walk in the park for many. The pandemic has caused untold angst among workers who have been forced to take huge salary cuts and others being laid off as companies struggle to keep afloat. According to government statistics., close to 2 million jobs in various sectors have been lost, with more people expected to lose their jobs if the pandemic persists.
For many, there’s little in the way of hope unless the restrictions are lifted and even then, it will still take some time for businesses to get back on track. Amidst the grim economic situation we find ourselves in, many have been forced to contemplate their financial habits. Many are grappling with stretched finances and wished they had done things differently to sail smoothly during this pandemic.
Let’s explore some poor financial decisions that COVID-19 has opened our eyes to, and maybe what we can do to be better prepared for future eventualities.
1) Not setting aside an emergency fund
Do you live from paycheque to paycheque with barely anything left to put aside for a rainy day? This is one of the most fundamental missteps most people make. Quite a number fall in this category and all it takes is a missed salary and off they go hurtling down a cliff. It’s an unnerving reality we don’t have financial reserves to weather difficult times such as these, yet we seem to have money for parties, road trips, buying a car, or a big Smart TV.
This pandemic has succeeded in reminding us that an emergency fund is a critical buffer in uncertain times such as these. A true emergency fund should see you through times of unemployment, illness, or disability. In fact, financial experts recommend keeping aside a sizeable savings kitty to last you 6 months of unemployment. How much longer can you last if you lost your job today?
2) Reliance on a single source of income
Another sad revelation. Most people are heavily reliant on one source of income for all of their needs. Often, the comfort of a salary and perks such as health covers lulls many into a false sense of security, such that when your employer suddenly folds up or lets you go, you find yourself in a deep financial hole.
In the aftermath of the pandemic, a decent number of people have been pushed into selling farm produce from their cars and venture into other money-making gigs. We are talking civil servants, supervisors, clerks, and other professionals and I’d like to laud them for taking the bold step and venturing into looking for the elusive penny regardless of their job titles. But I can’t help but imagine how far they would be now had they started a money-making venture by the side which would have aptly cushioned them in these difficult times.
Nowadays, a single income is similar to putting all your eggs in one basket. It’s not too hard to imagine what would happen when the basket falls off. In the same way, having a single stream of revenue is just as risky. The way I see it, having a side gig is not a thing to be ignored anymore. In addition to having an emergency fund, a side hustle is a buffer to cushion you when things go south. And the earlier you begin creating extra streams of income, the better it will be for you in the future.
3) Spending on things we don’t really need
Something that hasn’t escaped my attention is how people are offloading stuff they bought only a few months back Someone offered to sell me a fridge barely 5 months after buying it. Which got me thinking, are we buying things we don’t really need or can barely afford? Or perhaps we are keeping up appearances to try and fit in with the rest of our peers. Whichever the case, it’s clear that our priorities are informed by the need to keep up with the Joneses, and looking ‘cool’. The truth is most Joneses are broke and only give a false impression of how well they are doing. In the end, you will discover you lived a lie about your high flying lifestyle an very little to show for a decade down the line.
As the year folds itself in half, it’s time we rethink our money decisions and make lasting financial goals. The biggest money lesson you can borrow from this pandemic is saving and investing for a better future. Save, and look for avenues that will help you generate extra streams on income. A single source of income doesn’t cut it anymore.